I wanted to reach out to the community, specially those that have been investing in individual stocks for a prolonged period of time. I have a concern about DIS and what management is doing and want to know if investors have experienced this before with other large companies and what was the outcome of that investment. I've been a $DIS investor since 2023. It has had it's ups and downs. During this time it has peaked to $120 at least 4 times. The stock is very volatile. But that is not my risk concerns I had with the company. In no specific order, I am also NOT concerned about the following (which seems to be the popular bear cases): 1. Wokeness. 2. Its debt and its ability to service it. 3. Geopolitical risks. 4. Profitability. 5. Growth prospects. 6. Corporate governance. 7. It's ability to attract and retain customers. 8. COVID 2,3,4 or 5.0 What I'm concerned about right now is how management is using its cash that is flowing in. What they been doing for the past few years is using the cash coming in for capex, investing in growth, paying off debt and repurchasing of stock all at the same time. Therefore leaving absolutely no buffer, no margin of error. I'm unclear if I should define it as using the cash efficiently or being so confident in the business that management feels there doesn't need to be a buffer. I also have taken into account $DIS has long relationship with banks and debt investors, therefore they get good rates on the debt compared to their peers. All this would've been fine if management/insiders were buying Disney but they aren't, even though the past 6 months they've purchased more shares than sold. Would like to hear what other practitioners experience is with past investments that has this kind of allocation characteristics. Appreciate your precious time 🙏
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7 Comments
Paul N@pauln · 5d
I’ve said my peace on this company many times. #1 is a big concern. DIS has alienated 50% of its entertainment base with activistic “woke” content designed to social engineer everyone. I don’t care if some folks think this is nonsense. It’s fully verifiable with past statements from its highest placed decision makers over a 10 year span. Get woke go broke is a real outcome. Secondly they straight out lied to and even shut out shareholders showing up with the companies directional concerns. For those reasons alone I will put my investment money elsewhere.
Scott S@scottsinvesting · 6d
I'm also NOT concerned with #'s 1, 2, 4, 6, 7 & 8. I am concerned with/ #3 geopolitical risks & #5 growth prospects tho'. I think their capital allocation is 'good', but not exemplary... I believe they're in solid financial health and I like that they're buying back shares at a price I feel is undervalued right now. I don't want them to go overboard, as paying down debt should be the #1 priority with CAPEX to fund growth initiatives being #2 IMO. Sounds like you want a larger cash cushion than the ~$5B currently sitting on their books. I'm almost always OK with the companies I'm invested in having a larger safety net, so I wouldn't mind seeing Disney go in that direction either. With that said, I'm OK with how they're allocating capital for the most part right now.
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